Correlation Between Broadwind and S A P

Can any of the company-specific risk be diversified away by investing in both Broadwind and S A P at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Broadwind and S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadwind and SAP SE, you can compare the effects of market volatilities on Broadwind and S A P and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Broadwind with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and S A P.

Diversification Opportunities for Broadwind and S A P

0.26

Correlation Coefficient

Broadwind  S A P

Modest diversification

The 3 months correlation between Broadwind and SAP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Broadwind is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Broadwind are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Broadwind i.e., Broadwind and S A P go up and down completely randomly.

Pair Corralation between Broadwind and S A P

Assuming the 90 days trading horizon Broadwind is expected to generate 3.66 times more return on investment than S A P. However, Broadwind is 3.66 times more volatile than SAP SE. It trades about 0.17 of its potential returns per unit of risk. SAP SE is currently generating about 0.1 per unit of risk. If you would invest  128.00  in Broadwind on April 24, 2025 and sell it today you would earn a total of  73.00  from holding Broadwind or generate 57.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Broadwind  vs.  SAP SE

Broadwind

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broadwind are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Broadwind reported solid returns over the last few months and may actually be approaching a breakup point.

SAP SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Broadwind and S A P

The main advantage of trading using opposite Broadwind and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind position performs unexpectedly, S A P can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in S A P will offset losses from the drop in S A P's long position.

The idea behind Broadwind and SAP SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.